Hon’ble NCLT Ahmedabad recently in the matter of Personal Guarantors of Alok Industries Limited also dealing with question of whether petition under Section 95 of IBC filed by original creditor is maintainable if underlying Debt is assigned as per Resolution Plan.
Hon’ble Judicial member of NCLT Ahmedabad has held that petition filed by original creditor under Section 95 of IBC is not maintainable considering the fact that once the debt is assigned to any person, the assignor has no right to recover it again for itself or on behalf of assignee. If both assignor and assignee starts recovery of debt an anomalous situation of recovery of debt twice would arise. Considering this situation, the original creditor being no longer lender to CD can file petition for recovery of any balance amount. Therefore, petition is not maintainable.
Hon’ble Judicial member of NCLT Ahmedabad also relied upon judgement of Hon’ble High Court of Australia which has delt with important question regarding status of Guarantee if underlying Debt is assigned in the matter of Kenneth Ruston Hutchens v Deauville Investments Pty Ltd.
Relevant observation of Hon’ble High Court of Australia in Hutchens is reproduced as below;
“If the debt is assigned but the guarantee is not assigned then the right in the original creditor to recover under the guarantee must at least be suspended so long as the debt is assigned. There cannot be two persons entitled to recover the amount of the same debt, one from the principal debtor, and so long as the principal debtor was in default, another from the surety. Let it be assumed otherwise and suppose that the original creditor, the assignor of the principal debt, could show that it was overdue and thereupon sued the surety. Let it be assumed that the surety paid. Then, the assignee sues the principal debtor. He must be entitled to succeed unless there are some special circumstances of estoppel in the particular case, a factor which I place to one side. The assignee under an absolute assignment could not be deprived of his right to recover from the debtor because the assignor had recovered from the surety.”
The principle of law enunciated by the Hon’ble High Court of Australia in Hutchens is to be effect that if the debt is assigned but the guarantee is not assigned then the right of original creditor to recover under the guarantee must at least be suspended so long as the debt is assigned.
However, Hon’ble Technical member of NCLT Ahmedabad has held that petition against Personal Guarantors of Alok Industries Limited is maintainable and the same is allowed.
Therefore, matter is referred to 3rd Hon’ble member of NCLT Ahmedabad so that matter is decided with the opinion of majority.
In past also Hon’ble Debt Recovery Tribunal (DRT) in the matter of State Bank of India and Ors vs Mr. Prashan Ruia, after relying upon judgement of Hon’ble High Court of Australia in Hutchens, dismissed the application against Personal Guarantors considering entire debt under Resolution Plan approved by Hon’ble NCLT has been assigned to Resolution Applicant.